3.5 Percent Raise for 2021 Backed by Unions, Hill Dems

Federal employee unions and some leading Capitol Hill Democrats on federal employee issues are backing a 3.5 percent raise for January 2021, essentially putting a stake in the ground for this year’s version of the annual consideration of a pay boost for the upcoming year.

The bills in the Senate (S-3231) and House (HR-5690) were offered in advance of the annual White House budget proposal that formally begins the congressional budget process. That proposal, for the fiscal 2021 budget year that will start in October, is expected February 10.

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The administration has not yet signaled what it will propose, unlike in the past two years when it was known in advance that it would propose a freeze.

A measure of private sector wage growth that is used under federal pay law indicated 3.0 percent for use in setting the 2021 raise. Under that law, a half percentage point is to be shaved off that amount and locality pay is supposed to be paid in addition to close the pay gaps in each locality.

That formula has not been followed in practice, though, due to the cost of the indicated locality raises and disagreements over the calculations underlying those figures.

Last year a similar early raise proposal from Democrats, also backed by employee unions, sought a 3.6 percent raise for January 2020.

The House later voted in favor of a 3.1 percent total raise for federal employees – 2.6 percent across the board and 0.5 percentage points as a locality component – to match the 3.1 figure being set separately for military personnel.

The White House later backed off its freeze proposal and endorsed 2.6 percent for federal employees. Ultimately it agreed to the 3.1 percent average raise as proposed by the House. That took effect with the first pay full pay period of this year (starting January 5 for most), with the amounts varying by locality from about 2.9 to about 3.5 percent.